529 account withdrawls

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Plan your 529 account withdrawals January is the start of a new college semester, and parents and grandparents may want a refresher course on 529 college savings plan withdrawals. Here are two things to consider. • Qualified withdrawals are tax-free. "Qualified" withdrawals are those you use to pay for college education expenses such as tuition, fees, books, supplies, and equipment. Be aware that some withdrawals may be taxable, such as when the account beneficiary receives a scholarship or other tax-free assistance. In addition, you must coordinate 529 withdrawals with Hope and lifetime learning credits, as well as distributions from Coverdell education savings accounts. These rules prevent the use of the same expenses to obtain multiple tax benefits. • Non-tax implications may affect timing of withdrawals. Financial aid may play a role in when you take money from your 529 account. For example, when grandparents own a 529 plan, withdrawals to pay for a student-grandchild's college costs may affect the amount of income the grandchild must report on a federal financial aid form. Planning for this generally means waiting to use grandparent-owned 529 funds in the student's last year or two, or transferring ownership of the account to the student's parents. A recent change to financial aid rules may also help. Starting with the 2017-2018 school year, the federal financial aid form will use income data from an earlier tax year than is used under the present rules. This change means some financial gifts — such as distributions from grandparent-owned 529 plans — may be made earlier. If you have questions or need help calculating 529 plan withdrawals, please give us a call. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.